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The Cryptocurrency Singularity

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Re: The Cryptocurrency Singularity

#61

Post by stouset »

jboggan wrote: post #42
sagitariusrex wrote: post #6

Whenever I read articles like this I'm reminded of this quote by Richard Buckminster Fuller "You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete." IMHO this is what Bitcoin is all about. Not a get-rich-quick scheme or whatever insults some people throw at it, but a sound, arguably better alternative to fiat currencies. Aside: If you h…

It's not a better alternative to fiat, and here's my best anecdote why: A few years ago I was in SV trying to network and raise money for the crypto options and futures exchange I had just built. I ended up being invited to a "Bitcoin poker" game at a Google exec's house up in the hills with other Bitcoin entrepreneurs, including Charlie Lee (founder of Litecoin and at the time chief engineer at Coinbase). We were pl…

Hysterical to me is the notion that Bitcoin is some kind of e-gold that will be of immense value when all of society begins to fall apart.

Access to cheap power, powerful electronics, and reliable Internet connectivity are not generally what I think of when I consider the downfall of society.

Re: The Cryptocurrency Singularity

#62

Post by root_axis »

clarkmoody wrote: post #23
root_axis wrote: post #18

Earlier quoted context omitted.

Bitcoin is not "better" than fiat currencies, it's worse in every way except for the fact that it is not operated by a central authority. In terms of convenience, security, and ease of use it is clearly worse. The world does need a "back channel" currency, and bitcoin is a perfect fit for this, but it will never move beyond that because there's simply no reason for the masses to use it.

Each type of currency has advantages on different dimensions. I disagree that fiat is better is every way except for decentralization. Fiat money is great as a medium of exchange in your local jurisdiction. Start moving across borders and you have problems. Save long-term in your bank account, and inflation will eat its value away. Have political or religious views that run counter to an oppressive regime, and you wi…

> Start moving across borders and you have problems

You have similar problems with bitcoin except they manifest themselves in a different part of the process, namely when you have to convert the transferred funds into local currency in order to use it for goods and service. Trying to coordinate in-person meet ups to exchange bitcoin for spendable money is inconvenient, unsafe and comes with a high markup, it's also a non-starter if you have to transfer the funds to a region with limited electricity/internet access or you're dealing with a non-technical recipient.

> Save long-term in your bank account, and inflation will eat its value away.

Bitcoin does not solve this "problem". The logic behind inflationary economic incentives aside, there is no guarantee that bitcoin's price will continue to rise, it could easily crash to half price tomorrow and recent history shows us that nobody really knows what events cause the price to swing wildly.

> Have political or religious views that run counter to an oppressive regime

As I said, not being operated by a central authority is one of the only benefits of bitcoin, however, in the case of an oppressive regime, bitcoin's usefulness begins to approach 0 since the oppressive regime could eliminate your ability to access the internet or they could just imprison or kill you.

Re: The Cryptocurrency Singularity

#63

Post by root_axis »

CryptoPunk wrote: post #24
root_axis wrote: post #18

Earlier quoted context omitted.

Bitcoin is not "better" than fiat currencies, it's worse in every way except for the fact that it is not operated by a central authority. In terms of convenience, security, and ease of use it is clearly worse. The world does need a "back channel" currency, and bitcoin is a perfect fit for this, but it will never move beyond that because there's simply no reason for the masses to use it.

It's much easier to invest in tokens/securities using ether than using the banking system. The actual trade of ether for tokens happens automatically, and with no barriers of geography or identity. So I think cryptocurrency can definitely be better money than fiat currency. It's programmable, with all control at the edges.

Trading cryptocurrency tokens is not investing, it's speculating in the hopes of making a return on the price increase. Investing is when you spend money to generate useful economic activity in exchange for a fraction of the operation. Trading eth and buying cryptotokens doesn't generate economic activity or give the spender any rights or privileges as it relates to cryptotokens, all it does is perform a direct value transfer from one person to another.

The programmability aspect is cool and novel but mostly useless in practice, .e.g smart contracts and similar tech have yielded close to zero in terms of useful applications. Besides internet gambling I cannot think of a single useful application for smart contracts even in theory, in practice they are non-existent.

Re: The Cryptocurrency Singularity

#64

Post by serhei »

jboggan wrote: post #42
sagitariusrex wrote: post #6

Whenever I read articles like this I'm reminded of this quote by Richard Buckminster Fuller "You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete." IMHO this is what Bitcoin is all about. Not a get-rich-quick scheme or whatever insults some people throw at it, but a sound, arguably better alternative to fiat currencies. Aside: If you h…

It's not a better alternative to fiat, and here's my best anecdote why: A few years ago I was in SV trying to network and raise money for the crypto options and futures exchange I had just built. I ended up being invited to a "Bitcoin poker" game at a Google exec's house up in the hills with other Bitcoin entrepreneurs, including Charlie Lee (founder of Litecoin and at the time chief engineer at Coinbase). We were pl…

> After a lot of lunacy including running around in the backyard and driveway looking for a spot of coverage, we finally settled on a system of handwritten IOU notes, and most people had to buy in twice and have an appointed stranger promise to send them BTC later. > > I would argue that there were few people savvier than our group when it came to Bitcoin, and we were having this experience? I realized I was maybe a little too immersed in the hype to see where Bitcoin was falling short in usability.

Ironically, this is not too different from how the financial industry solved the problem of having trouble moving large quantities of precious metals. Lots and lots of IOU notes. Eventually, the IOU notes were so ubiquitous that the underlying precious metals could be dispensed with entirely, and we got fiat.

Re: The Cryptocurrency Singularity

#65

Post by ramontayag »

zupa-hu wrote: post #5

I'm confused. Gresham's law sais "bad money drives out good". Inflation is bad, so from that follows that the money that inflates more will be more used. Okay, I buy that. Then this: > When the singularity is reached, I think people will be more likely to choose to spend their inflationary fiat currency instead of their deflationary cryptocurrency. I'm lost here. People already prefer to spend USD over Bitcoin. So I…

No, I don't think you misunderstood - I may have just not clear. Yes, it's the case now where people prefer to spend their deflationary USD, but I think it's primarily because many of us are speculating on the price of BTC. If and when btc is stable enough against USD, the trend of spending USD will continue but for a different reason: the USD's inflation. Hope I explained well.

Re: The Cryptocurrency Singularity

#66

Post by ramontayag »

RobertoG wrote: post #11
zupa-hu wrote: post #5

I'm confused. Gresham's law sais "bad money drives out good". Inflation is bad, so from that follows that the money that inflates more will be more used. Okay, I buy that. Then this: > When the singularity is reached, I think people will be more likely to choose to spend their inflationary fiat currency instead of their deflationary cryptocurrency. I'm lost here. People already prefer to spend USD over Bitcoin. So I…

I suspect that is not you who is confused, but the author of the article. I don't think he has a good understanding of what money is or how it works. It seems he thinks that there is limited quantity of dollars (or whatever) stacked under mattresses or something and that people is going to start spending them in order not to get stuck with them. It's funny.

I certainly may well be confused. I don't have an economics degree and just find the field fascinating. One reason I put it here is that there are many bright people not seemingly hesitant to share their opinion. Thanks for this! Mind expounding further?

Re: The Cryptocurrency Singularity

#67

Post by ramontayag »

BenoitEssiambre wrote: post #37

This is full of misunderstandings about monetary policy. Currencies that are not designed to lose value over time can not be stable. Intrinsically worthless tokens engineered to have better than market risk adjusted, liquidity adjusted, real returns compared to real productive investment will always be unstable and fluctuate increasingly wildly as they get more popular. This is a result of physical limits of producti…

If I understand this right, I don't think I necessarily disagree with you. My question is: if people can choose one or the other to spend, what do you think they'll choose? A currency that inflates quickly, or one that inflates less quickly?

Re: The Cryptocurrency Singularity

#68

Post by ramontayag »

leot wrote: post #21

Per the other comments here, the applicability of Gresham's law as the author describes is questionable. However, the author's broader point appears to be that the economic impact of a deflationary currency is largely unknown, and as expressed is worth considering. IANAE, but it seems at least conceptually possible that there could be an economy in which every actor's rational decision was to always buy some token be…

I did send the article to my old economics professor so he can tell me where I misunderstand things, but I haven't gotten a reply yet. ️

Re: The Cryptocurrency Singularity

#69

Post by ramontayag »

maxander wrote: post #8

The argument makes some intuitive sense (more people buying X over Y makes the value of X go up, which makes holding X more desirable, so more people buy X instead of Y...), but if this effect actually happened I don't see why it would happen with a cryptocurrency and not, say, gold. Nothing about the argument seems specific to cryptocurrencies- it's used here simply as a commodity whose value has historically been g…

Yes, you're right to bring up confirmation times and community. I didn't include that on purpose in order to focus on the good vs bad money part. My hunch is the scaling issues will (eventually) get addressed when we hit the barriers. Might not even be Bitcoin.

Re: The Cryptocurrency Singularity

#70

Post by ramontayag »

jms18 wrote: post #7

> Will governments around the world begin to make their currency deflationary in order to make it attractive? rofl If you want people to use currency more, you make it inflate faster. This guy does not understand macroeconomics.

If I read this comment right, I agree with you. People will use inflationary currencies more because they aren't as good as a store of value.
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